Question 1

For the economy as a whole, how does income compare to expenditures? Explain.

Accepted Answer

For the economy as a whole inc...

Question 2

Table 23-5
The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015.
Prices and Quantities 
-Refer to Table 23-5. In 2016, this country's

Accepted Answer

A)   real GDP was $880, and the GDP deflator was 111.4.
B)   real GDP was $780, and the GDP deflator was 88.6.
C)   real GDP was $880, and the GDP deflator was 112.8.
D)   real GDP was $780, and the GDP deflator was 112.8.E) C) and D)
F) A) and B)

Question 3

The purchase of rice produced this period is included in GDP if the rice is

Accepted Answer

A)   used in a meal a restaurant sells during the same period they buy the rice.
B)   purchased by a family who uses it to make tuna casserole for its supper.
C)   purchased by a frozen food company to increase its inventory.
D)   B and C are correct.E) A) and B)
F) A) and C)

Question 4

If in some year real GDP was $25 billion and the GDP deflator was 68, what was nominal GDP?

Accepted Answer

A)   $2.72 billion.
B)   $17 billion.
C)   $36.8 billion.
D)   $43 billion.E) A) and B)
F) B) and C)

Question 5

Otherwise legal transactions that go unreported or unrecorded are called

Accepted Answer

A)   the underground economy.
B)   the shadow economy.
C)   the informal economy.
D)   All of the above are correct.E) A) and B)
F) None of the above

Question 6

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

Accepted Answer

A)   Why do prices in general rise by more in some countries than in others?
B)   Why do wages differ across industries?
C)   Why do national production and income increase in some periods and not in others?
D)   How rapidly is GDP currently increasing?E) B) and C)
F) A) and B)

Question 7

Recessions are not associated with which of the following?

Accepted Answer

A)   increased bankruptcies
B)   falling profits
C)   falling incomes
D)   falling unemploymentE) B) and C)
F) B) and D)

Question 8

Household spending on education is counted in which component or subcomponent of GDP?

Accepted Answer

A)   consumption of durable goods
B)   consumption of nondurable goods
C)   consumption of services
D)   investmentE) B) and C)
F) B) and D)

Question 9

In 2012 a country had a real GDP $15.4 trillion and GDP deflator of 125. If that country's GDP deflator equals 115 in 2013, what is the rate of inflation in 2013?

Accepted Answer

The answer of In 2012 a country had a real...

Question 10

Table 23-6
The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. 
-Refer to Table 23-6. In 2011, this country's nominal GDP was

Accepted Answer

A)   $260.
B)   $440.
C)   $620.
D)   $760.E) A) and B)
F) All of the above

Question 11

A good is produced by a firm in 2009, added to the firm's inventory in 2010, and sold to a household in 2010. As a result, on net,

Accepted Answer

A)   2009 GDP increased and 2010 GDP decreased.
B)   2009 GDP decreased and 2010 GDP increased.
C)   2009 GDP did not change and 2010 GDP increased.
D)   2009 GDP increased and 2010 GDP did not change.E) A) and B)
F) A) and C)

Question 12

In the economy of Talikastan in 2015, exports were $200, GDP was $2000, government purchases were $200, imports were $270, and investment was $500. What was Talikastan's consumption in 2015?

Accepted Answer

A)   $830
B)   $1230
C)   $1370
D)   $1770E) B) and C)
F) A) and D)

Question 13

GDP includes the value of paper clips but does not also count the value of the metal used to make them.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is included in GDP?

Accepted Answer

A)   medical marijuana purchased from a government-run pharmacy by a glaucoma patient
B)   recreational marijuana purchased from a drug dealer by a college student
C)   recreational marijuana produced and consumed by a man in his attic
D)   All of the above are included in GDP.E) A) and C)
F) All of the above

Question 15

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Accepted Answer

A)   U.S. consumption falls by $500, U.S. net exports decline by $500, and U.S. GDP declines by $1000.
B)   U.S. consumption does not change, U.S. net exports decline by $500, and U.S. GDP declines by $500.
C)   U.S. consumption increases by $500, U.S. net exports remain the same, and U.S. GDP increases by $500.
D)   U.S. consumption increases by $500, U.S. net exports decline by $500, and U.S. GDP remains the same.E) A) and B)
F) All of the above

Question 16

Which of the following examples of household spending is categorized as investment rather than consumption?

Accepted Answer

A)   expenditures on durable goods such as automobiles and refrigerators
B)   expenditures on intangibles items such as medical care
C)   expenditures on new housing
D)   All of the above are correct.E) C) and D)
F) All of the above

Question 17

In the base year, the GDP deflator is always

Accepted Answer

A)   -1.
B)   0.
C)   1.
D)   100.E) C) and D)
F) B) and C)

Question 18

If real GDP doubles and the GDP deflator doubles, then nominal GDP

Accepted Answer

A)   remains constant.
B)   doubles.
C)   triples.
D)   quadruples.E) B) and C)
F) A) and D)

Question 19

GDP is not a perfect measure of well-being; for example,

Accepted Answer

A)   GDP excludes the value of volunteer work.
B)   GDP does not address the distribution of income.
C)   GDP does not address environmental quality.
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 20

If an economy's GDP rises, then it must be the case that the economy's

Accepted Answer

A)   income rises and saving falls.
B)   income and saving both rise.
C)   income rises and expenditure falls.
D)   income and expenditure both rise.E) C) and D)
F) B) and C)

Exam 23: Measuring a Nations Income

In the economy of Talikastan in 2015, exports were $200, GDP was $2000, government purchases were $200, imports were $270, and investment was $500. What was Talikastan's consumption in 2015?

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GDP includes the value of paper clips but does not also count the value of the metal used to make them.

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Recessions are not associated with which of the following?

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If real GDP doubles and the GDP deflator doubles, then nominal GDP

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Table 23-5 The country of Caspir produces only cereal and milk. Quantities and prices of these goods for the last several years are shown below. The base year is 2015. Prices and Quantities -Refer to Table 23-5. In 2016, this country's

Correct AnswerverifiedShow Answer

Which of the following questions is more likely to be studied by a microeconomist than a macroeconomist?

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If an economy's GDP rises, then it must be the case that the economy's

Correct AnswerverifiedShow Answer

For the economy as a whole, how does income compare to expenditures? Explain.

Correct AnswerverifiedFor the economy as a whole inc...View AnswerShow Answer

In the base year, the GDP deflator is always

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In 2012 a country had a real GDP $15.4 trillion and GDP deflator of 125. If that country's GDP deflator equals 115 in 2013, what is the rate of inflation in 2013?

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A good is produced by a firm in 2009, added to the firm's inventory in 2010, and sold to a household in 2010. As a result, on net,

Correct AnswerverifiedShow Answer

The purchase of rice produced this period is included in GDP if the rice is

Correct AnswerverifiedShow Answer

When a U.S. citizen buys $500 of Chinese-made parts for a motorcycle,

Correct AnswerverifiedShow Answer

Otherwise legal transactions that go unreported or unrecorded are called

Correct AnswerverifiedShow Answer

Table 23-6 The table below contains data for the country of Batterland, which produces only waffles and pancakes. The base year is 2013. -Refer to Table 23-6. In 2011, this country's nominal GDP was

Correct AnswerverifiedShow Answer

Which of the following examples of household spending is categorized as investment rather than consumption?

Correct AnswerverifiedShow Answer

GDP is not a perfect measure of well-being; for example,

Correct AnswerverifiedShow Answer

Household spending on education is counted in which component or subcomponent of GDP?

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Which of the following is included in GDP?

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If in some year real GDP was $25 billion and the GDP deflator was 68, what was nominal GDP?

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For the economy as a whole inc...
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